Disruptive Innovation, Education, and Open Data with Tim O'Reilly

Disruptive Innovation and Business Models

The combination of innovative technology and new business models underlie the most exciting developments coming out of startups and large organizations. The developers, geeks, and nerds creating these disruptions have influence that extends into the global economy.

Tim O'Reilly, founder and CEO of O'Reilly Media, runs conferences, invests in early-stage startups, urges companies to create more value than they capture, and tries to change the world by spreading and amplifying the knowledge of innovators. During this episode, we explore innovation, education and publishing, and the value of open data in the government.

Transcript

Michael:

(00:02) The world of geeks and data and innovation and disruption all come together. Today, on episode number 111 of CXO-Talk, we’re thrilled to welcome Tim O’Reilly.

(00:31) Michael, thank you very much for that enthusiastic introduction and I’m just honored and thrilled to have Tim on the show today. Welcome Tim.

Tim:

(00:41) I’m very glad to be on the show too. I’ve always wanted to be in the office of (Louis and Hal it’s like a classic episode)

Michael:

(00:5) Vala I’m not sure whether we were just complimented or insulted.

Vala:

(00:54) I don’t know but it doesn’t matter…

Michael:

(00:56) It sounded good.

Vala:

I’m still delighted.

Tim:

(00:58)And you say you’re from Boston?

Michael:

(01:02) We’re from Boston.

Tim:

(01:03) Alright, so end with the in jokesokay, let’s get to the show.

Michael:

(01:04) You know for us this is it.

Vala:

(01:11) Tim could you please briefly share with our audience a little bit about your background. Although I think most people will know but would love to hear from you.

Tim:

(01:18) Yeah, I’m the founder and CEO of O’Reilly Media. Started my company many many years ago as a tech writing consulting firm. Became a publisher and realized that most of my books were about topics that were coming from the fringes originally wekind of made it big, we wrote early books about the internet, UNIX and then open source software. Then I realized that nobody was promoting this, so I started a conference business to help promote open source software.

(01:48) Somewhere along the line I realized that a big part of our most effective marketing was a kind of activism. Getting Brian Erwin, who had been the Director of Activism for The Sierra Club and came to work for me and at that time published The Whole Internet Users Guide. We just went out there and he said ‘nobody cares about your products, you know pitch the ideas.’ So we went out there and promoted the internet and then of course people said, well how do I learn more.

(02:19)And as part of that we also discovered the World Wide Web early on and we created a product called GNN (Global Network Navigator), which we originally thought of as a demo of the World Wide Web that we would host in bookstores. And then we said, no this isn’t a demo, it’s a product. So it became the first web portal and we eventually sold it to AOL and they screwed it up so that was the end of that.

(02:43) I’ve basically been around technology know you as somebody who has helped move the story forward. Our mission as we kind of retrospectively defined it back around 2000 was, ‘changing the world by spreading the knowledge of an innovators’. So that was something that tied altogether all the things we do. We were publishing and had events, now we have much more of an integrated media model, where we’ve launched Safari as an online subscription service to our learning content, books and video.

(03:19) Back in 2000, we launched a small early stage venture fund, but all these things are tied together by this notion of changing the world by spreading the knowledge of innovators. We find interesting people who are doing stuff that other people want to do and then we try to figure out the best way to spread that knowledge for the future to make it faster and better.

Michael:

(03:39) You know, reading about your early stage venture fund, I was really struck by the fact that two things, one you say that you do not seek the typical charismatic entrepreneur and you say that the best way to get funded isn’t necessarily usually the way to get funded is to have some type of personal contact with you or the other people running the fund.

Tim:

Michael:

(00:02) The world of geeks and data and innovation and disruption all come together. Today, on episode number 111 of CXO-Talk, we’re thrilled to welcome Tim O’Reilly.

(00:31) Michael, thank you very much for that enthusiastic introduction and I’m just honored and thrilled to have Tim on the show today. Welcome Tim.

Tim:

(00:41) I’m very glad to be on the show too. I’ve always wanted to be in the office of (Louis and Hal it’s like a classic episode)

Michael:

(00:5) Vala I’m not sure whether we were just complimented or insulted.

Vala:

(00:54) I don’t know but it doesn’t matter…

Michael:

(00:56) It sounded good.

Vala:

I’m still delighted.

Tim:

(00:58)And you say you’re from Boston?

Michael:

(01:02) We’re from Boston.

Tim:

(01:03) Alright, so end with the in jokesokay, let’s get to the show.

Michael:

(01:04) You know for us this is it.

Vala:

(01:11) Tim could you please briefly share with our audience a little bit about your background. Although I think most people will know but would love to hear from you.

Tim:

(01:18) Yeah, I’m the founder and CEO of O’Reilly Media. Started my company many many years ago as a tech writing consulting firm. Became a publisher and realized that most of my books were about topics that were coming from the fringes originally wekind of made it big, we wrote early books about the internet, UNIX and then open source software. Then I realized that nobody was promoting this, so I started a conference business to help promote open source software.

(01:48) Somewhere along the line I realized that a big part of our most effective marketing was a kind of activism. Getting Brian Erwin, who had been the Director of Activism for The Sierra Club and came to work for me and at that time published The Whole Internet Users Guide. We just went out there and he said ‘nobody cares about your products, you know pitch the ideas.’ So we went out there and promoted the internet and then of course people said, well how do I learn more.

(02:19)And as part of that we also discovered the World Wide Web early on and we created a product called GNN (Global Network Navigator), which we originally thought of as a demo of the World Wide Web that we would host in bookstores. And then we said, no this isn’t a demo, it’s a product. So it became the first web portal and we eventually sold it to AOL and they screwed it up so that was the end of that.

(02:43) I’ve basically been around technology know you as somebody who has helped move the story forward. Our mission as we kind of retrospectively defined it back around 2000 was, ‘changing the world by spreading the knowledge of an innovators’. So that was something that tied altogether all the things we do. We were publishing and had events, now we have much more of an integrated media model, where we’ve launched Safari as an online subscription service to our learning content, books and video.

(03:19) Back in 2000, we launched a small early stage venture fund, but all these things are tied together by this notion of changing the world by spreading the knowledge of innovators. We find interesting people who are doing stuff that other people want to do and then we try to figure out the best way to spread that knowledge for the future to make it faster and better.

Michael:

(03:39) You know, reading about your early stage venture fund, I was really struck by the fact that two things, one you say that you do not seek the typical charismatic entrepreneur and you say that the best way to get funded isn’t necessarily usually the way to get funded is to have some type of personal contact with you or the other people running the fund.

Tim:

(04:13) You know, I’m not sure or I don’t know when or where I said that. I have nothing against charismatic entrepreneurs, but what I will say in what we’re most attracted to are people with ambitious ideas that have sort of some kernel of value to them.

(04:33) You know, like if you look at one of our investments, Planet Labsyou know, they have this big vision you know we’re going to beat this game changing and the way wer’e going to make data available. They’re a microsatellite company. They’re imaging the surface of the earth every 24 hours as opposed to you get an image you know once a year. You know this enable all kinds of new things. Super cool, you know geeks out of NASA who just love the fact that they’re just so into the technology. But we also loved it when they had a game changing vision.

(05:07) So you know, it’s really just the combination of many infact are charismatic, but what we’re not interested in are the people from the get-go gunning for the exits. You know I started my company with no venture capital, just with the idea that we would find customers and we funded the business ever since by finding people who are willing to pay us for what we do.

(05:39) And I find that, there are certainly times when venture capital is the right way to grow a business, but there’s also a whole class of entrepreneur who is often overlooked.

(05:53) We’ve recently launched something called (inde.bc?) which is really how do we bring some of the skills and the perspective that a venture capitalist brings but through a small company without this kind of model that says, you know, we’re going to put money in and we’re going to expect to get it out within the 10 year horizon with our fund because you know we need to have an exit and that’s what this is all about.

(06:16) You know instead of saying we may be interested in building a company for the long term. I’ve been building O’Reilly media for 35 years and very successful company and is a really good thing own. And we have a lot of opportunities when people wanted to buy it and we have not been interested. It doesn’t mean that would never happen but you know we were obsessed with our mission you know and we weren’t obsessed with well, what’s our next round of financing and you know when does that lead to an exit. And I have to say this, there are far too many companies like that.

(06:55) The really big successful ones have a mission, and you know you see companies with a mission and you see entrepreneurs with a mission, and I guess I would say that sense of mission is what we work for.

Vala:

(07:08) So your confidence and investments is it fair to stay focused on as Michael said, geeks and disruptive innovation and certainly core values and missions matter, but can you talk a little bit about the word disruption. What does that mean to you? Is that a fair assessment of what your confidence tracks? No Okay- no good.

Tim:

(07:28)I have to say I find that the religion of disruption to be somewhat offensive quite frankly. You know I am about creating things and yes, disruption – creative disruption are part of a process. You have a vision of what you’re building, and you know, we’re going to disrupt this, we’re going to disrupt that is first of all it’s cheap thinking.

(08:00) You know when Logan Green started what became Lyft you know he wasn’t sitting there you know which inspired a lot of part of Uber that everybody is you know so excited about.

(08:13) He wasn’t into disrupting transformation, he was into creating a better transportation system. He was a transportation geek, he’d been on you know the transportation board in LA and the he went to Zimbabwe and said wow, we have a system here in the US that serves 5% of the people and had massive losses. Over there they gotten this jitney system that for 95% of the people that really works and could we use technology to create something like that and then Uber came in with that really wonderful one point vision and then these two companies are playing leapfrog in terms with innovation.

(08:53) They are reinventing you know and then when you look back, Henry Ford wasn’t saying I want to you know disrupt the horse and buggy market. He had a forward looking vision of a kind of society that he wanted to create. And I think that positive way of framing it is so much more powerful and important because you know were just going to go and break up this old market and won’t that be great. It doesn’t really tell us what we’re going to replace it with.

Michael:

(09:24) Well there is this notion when people talk about disruption in this way there is this notion of financial engineering in a sense in order to accumulate great wealth for the people who are undertaking that manipulation or disruption, which I think are synonyms in that sense. So there really doesn’t have to be from that point of view a sense of vision and I think sometimes people graft the sense of vision on top of it as a kind of a dressing up or cosmetic for the desire.

Tim:

(10:02) You could say oh yeah, the guys who did all the CEO’s who disrupted the mortgage market, you know and they created this enormous wealth for themselves but they managed to screw the rest of us pretty badly. And so I think it’s so important for us all in Silicon Valley to have a sense of value.

(10:21) And you know, the thing that I have found in my career, that’s an awful lot of the most interesting movement actually start – not even with entrepreneurs but with people who are having fun. You know, if you look at the defining you know technology waves of my career that I’ve been part of to start with you know the Internet. You know in the early days nobody thought there was money to be made.

(10:51) Think about open source software, in the beginning nobody thought there was money to be made. After the dot com bust, the web 2.0 we talked about, nobody thought there was money to be made. Half the people who did part of the previous were out of work and they were doing the things that they just felt were cool again.

(11:07) (The Maker Movement?) and you know I’m deeply involved in some of the open government movements where people who have been in big tech companies going to work and you know for the government or for working with the government, because they wanted fix the services in our society. So it’s this combination of, hey, I don’t care about making money. I just want to make something really cool.

(11:32) There was this actually wonderful talk – I was just down in Porto Rico and it was a hackathon a Code for America Porto Rico chapter hackathon. They call them the Code of American brigades. And this woman gave a talk and it was really about you know, being an entrepreneur and she said, ‘you know being an entrepreneur you know means that we are not waiting for somebody else to deliver what we want. You know, we’re creating our own future.’

(12:06) I think the way that we and technology need to think is we are creators, not just of our own future but for the future for a lot of other people, and I think we have a great deal of responsibility as the creators of the future, to say is this going to be a better future.

(12:27) And that doesn’t mean that we don’t disrupt, and there is no question that says for taking the current you know disruptive darlings, Uber, and AirBnB. They are disruptive to you know the taxi industry and the same way that you know Amazon was disruptive to retailers, or Google was disruptive to all kinds of content providers.

(12:47)But they’re grim and fundamentally by a positive vision of wouldn’t this be great for people if the world worked this way. And I think the way we talk about it, we need to celebrate – not the disruption but the creation.

Michael:

(13:06) So is this notion of creation and creating in a positive sense, being interwoven with some sense of responsible mission. Does that underlie the various activities in which you’re engaged and in which allow the media…

Tim:

(13:26) Absolutely.

Vala:

(13:31) Can you give us some examples of companies that are having fun with the right core values and you know market makers and doing it for the right reason, right mission I mean we mentioned disruption with Uber and AirBnB. You know, Tesla , Google , you know the Internet of things, the autonomous cars, it seems like it doesn’t matter the size of the company if organizations have the right core values and mission, they can be having fun and creating value.

Tim:

(14:04) I think that’s absolutely true, and the thing that I would say is in a lot of ways that seemed to be almost a stage of companies. You know I think Google of you know, 10 or 15 years ago was having a lot more fun than the Google of today. Even although, you know Larry and Serge really are you know deeply committed and value driven.

(14:33) I think you get to a certain size and the logic of the machine takes over. But you know, I think there are a lot of people there who are – and all of these tech companies you know who are super excited about what they do. And I you know, that’s what I’m drawn to, you know it’s that excitement. And you know you talk to some tech person and they are wrestling you know deeply with a problem and they are excited about solving that problem. That’s just like (meet and drink something?15:10)

(15:12) You know I just met this morning, I’m working on a new event which I haven’t announced yet and it’s really about the future of work and how everything from the on demanding economy to you know, new forms of training. Augmented reality is going to change you know the nature of work coming the Fall in San Francisco.

(15:32) And you know it was a meeting with you know this guy who is a chief economist at GE. He is just like super engaged with the same problemsand it’s just like, oh my god, this is so awesome!

(15:43) You know, we are thinking hard about how we are going to solve these problems for the future. You know I met recently with Tom Pritzker, the chairman of Hyatt and you know he is not a guy that is just sitting there, you know being reactionary against the future. He is like grappling with the real problems of how do I transform my business, you know in this era where you know the rules have changed. And you know since everybody from old industries to new industries, there are people who are you know, they see the future and they are trying to guide their company towards that future. And you know, sometimes it’s by sculpting what you’re doing. I mean certainly my own career we were originally a disruptor in publishing, and then publishing itself got disrupted and you know we have moved into other businesses, and we’ve had to kind of manage legacy and new stuff.

(16:43) It’s all, you know – anyway whatever. It reminds me somehow back to this idea of having fun, Paul Hawken, once wrote a book called Building A Business, and in it he said, ‘Every business has problems. The difference between a good business and a bad business is that a good business has interesting problems.’

Michael:

(17:09) You know, when I was in high school I wrote Paul Hawken a letter, this was way before the days of the Internet. Because I just admired him so much, and my letter was, you know I’m trying to figure out what I should do. Should I get an MBAand was in college. And he wrote back you know a paper letter, and he said I never really got an MBA, so I can’t really tell you what to do.

You know part of what you are describing though seems to me, in terms of investments and technologies and so forth, there is a time horizon element because the entire venture or much of the venture capital industry is structured around very short time horizons, whereas in your case you incubated or developed your business organically over a very long period of time.

So it seems like what you’re describing in some sense to some degree is almost incompatible with the typical venture model of that just demands, intense growth very fast.

Tim:

(18:22) You know, yes and no; there is the myth and the reality. The reality is you know venture capitalists are better in many cases. I mean, the really good ones actually know how to get in there and help build a company, but there is a huge amount of venture capitalists who are just like they are sitting at the crap table or roulette table and they’re putting their money on such and such and hoping.

(18:56) Yes, they locked that exit. But the good ones know that they are building a business, and they know that they are building a business for the long term. And you know, even when they fail that’s their ambition. And you know, I actually find that there are a lot more entrepreneurs in my opinion who have bought into the quick flip I mean it’s actually system, both the VCs and the entrepreneurs.

(19:29) But you know, when Larry and Serge started Google, they were not sitting there looking for the flip. They had an engine they had their teeth into and had an interesting problem, and you know there were doing this thing as a project and then it kind of out grew when they were getting picked out at Stamford. You know, and you look at that and then some people came along and said okay, we’ll help you become a business, and then they get some real coaching and some help. And then they build a big world changing business.

(20:03) I think that is really the ambition of every VC and should be the ambition of every entrepreneur. And it doesn’t have to be as big as Google. You know, I looked in my company and there are 500 employees and a couple of hundred million in revenue, where we have I think change the world, created meaningful.

(20:22) There is a lot of Internet companies and vey big ones where I started O’Reilly books. In fact one of our slogans that came out that year around 2000 and Brian Irwin again said that should be our slogan, ‘create more value than you can capture’. You know, we sold you a $35 book, and you made a billion-dollar business, that’s pretty awesome.

(20:50) And it’s exciting, and you know and I love that and I remember once I was in a conference and somebody came up to me. I can’t remember who he was and said, you know I done something innovative and I was really scared that I was going to lose the job. Then in one of your talks, you said it was really cool, and so instead I got a promotion. You know and I love that story.

(21:14) Here we had that at Code for Americaand I remember it was when we were working on open data in the first year and I think it was in Philadelphia, and this guy was like, well you know I’m not supposed to do this you know, but I’m going to give you this data that you are asking for. And then they made something of it and it was like, by the end of the year he was a hero.

(21:36) You know, and that kind of change in culture that can happen in the course of you know, that’s kind of disruption to, you know when people who have had successful jobs in high-tech and now going to work in government to try and fix really hard problems, that’s disruption.

Vala:

(22:00) Tell us about Code for America. You just mentioned it and our audience would love to know more about that.

Tim:

(22:06) Yes, first disclosure, its founder and run by my wife, Jennifer Polka, so I’m very definitely an interested party and I’m on the board as well. But a lot of what we do and one way you can think about it is a Peace Corps for geeks. It started out with the program, The Code for America Fellowship, which put small start-up teams in the cities to work on interesting problems, and there is a sort of number of route to scaling from there.

(22:40) You know sometimes the city adopts the technology and comes the official programme there, but we are also really not just looking to the product, but also to the culture chain. So they go, oh we thought that was a $6 million project that we had to hire a vendor for. You did in six weeks; there must be something wrong with our process.

(23:06) You know, there are all these people that would write white papers about bringing better technology to government, although there is nothing as effective as actually demonstrating that it’s possible to do you know apply these new approaches to the problem that they have been told that are really hard, and you just need that Oracle upgrade and we can do it for you.

(23:28) So that’s one vector and another vector is sessions while you keep going, so we’ve had fellows who have gone on to start companies. You know, we had a project whereby were doing white status and that meant a lot of data extraction and visualization in the city of New Orleans and now they have a business called Civic Insights, and they help cities that do that kind of thing. Or (Textism?) Is another company that routed a Fellowship project and it was okay how can we use text messaging to have planning departments get input and forces of those who show up at planning meetings.

(24:05) So these are interesting small problems, but then there are other models, and we did in 2013 we work with a city in the County of San Francisco on a problem that they had with food stamps. Like they had this churn in the system were people apply and then they fail to meet some requirements. And then they fall out of the program and have to reapply and it is costly for them, and costly for us. You know and can you help us with this, and they go can we apply for food stamps.

(24:39) So they basically just debugged the process. I mean it was just (a user set of design?), and it was, hey we’ve got this letter can you tell me what to do, and can you figure out what to do when you get this letter. And it was, well no, so why do you think somebody with English is a second language who dropped out of high school, or doesn’t have a fixed address is going to get this letter from your lawyers and know what to do.

(25:04) Now, we get a text message that says, you know there is a problem with your benefits, call the office. You know, and that’s now grown and we are kind of doing some work with the entire state of California, to try and show them but you know it is still like a big a vendor who is maintaining this 20 – 30 years old system written in COBOL, and it’s like can you nudge that in the right direction.

(25:32) But there is a lot of different models, and there is now a venture fund called the (Gupvec fund?) which kind of came out of Code for America, where we are funding start-ups.

(25:41) And again, back to disruption you could say well we are ‘disrupting government’– no, what we are really trying to do is. Here’s the thing, Jen gave this great talk once. She said, if we didn’t care about the problems within our society that would be one thing. But we do care about them and we allocate enormous resources to try and fix them, but we fail because we are doing it so badly.

(26:10) You can really say the mission for Code for America which is non- (Republican?)It’s basically, if you look at the scale of resources that we are putting towards hard problems, whether it’s you know in policing, healthcare, or access to social services or economic development. And you go making those resources work more effectively actually addresses both the Republican perspective that government is too big and the Democratic perspective, but look we still have all these problems. And you know the answer yes, you both kind of saying the same thing, which is allocating these resources to solve important problems, and we are allocating them badly, because we are actually not bringing the latest technology.

Michael:

(27:01) You know, these government technology problems, actually what seemed to be technology problems, we had a show with our mutual friend, David Bray, who is the CIO for the FCC, and Craig Newmark, who of course founded craigslist, and who is working very closely with the VA and other organizations in the government. And the focus of that conversation was on the cultural don’t mention, because simply changing technology alone does not address the issue as you were describing contractors who have a vested interest in multi-decade projects. So it seems like there has to be some sort of intersection between the technology and the culture and the change agents as David Bray describes them.

Tim:

(27:57) Absolutely so you know, celebrating and enabling and supporting change agents is a huge part of what we do. And again that’s really consistent with everything that what wo do at O’Reilly to. Because if you look at, again the history of some of the movements that we’ve been involved with, you know in the beginning open source was this thing that nobody took seriously and being able to tell a story that validated it was an important part of that acceptance.

(28:31) And I think again, a big part of what I do is framing in some sense. You know with open source versus free software for example, the free software narrative was, we are the rebels and we are going to destroy the evil Empire. And you know, the open source narrative was actually no, there is a whole lot of people who are building really really important stuff that you already all rely on. You know I was kind of the one who framed the open source story around the Internet.

(28:58) You know, you think you know it’s just a bunch of long-haired radicals that are going to up end the current order, but guess what – you send emails don’t you? Is all being routed by this guy’s programme – oh!

(29:12) You know, you have a domain name. Guess what, this long-haired guy over here wrote the software that you know allows that domain name -bank of America.com or New York Times.com to work – oh. You have a website, this guy led the project that probably runs in your website. Then all of a sudden they go oh! This isn’t this radical movement, is just something that came from the fringes, and is already central to our lives, let’s validate it.

(29:35) Similarly after the dot com bust, it was like why did Google succeed, why did Amazon succeed? What are some of the principles that really mattered? In a way it is kind of teaching and that again is another way of thinking about what we do at O’Reilly, where we are effectively a teaching and learning company.

(29:56) We really support entrepreneurial learners, and I don’t just mean entrepreneurs as learners, but people who want to take charge of their own learning. So many of the technologies that will cover are early stage, and are not widely accepted yet, you learn from your peers and we have basically just try to accelerate that learning. Originally as said by publishing and then later by saying, let’s bring all of these people together so they can learn from each other and build communities of practice.

Vala:

(30:30) Tim I want to shift the conversation a little bit. Before we went live on the air, we were talking a little bit about basketball and we are both Larry Bird fans.

Tim:

I’ma Warriors fan at the moment.

Vala:

(30:47) That’s right and it was once said that you know the team with the most superstars usually wins and and analogous to that is it fair to say that companies with the most data are going to win and I make that comment and I want to follow-up with a question from Twitter from Bala Jaffery, who wanted your thoughts on the Internet of things, and how that technology will impact customer experience. So the importance of data and IOT in terms of customer experience.

Tim:

(31:20) So the first thing I would say is with qualifications you know, data is an incredibly important business asset. And you know, at the centre of my narrative about you know what distinguished what I called web 2.0 was this notion of data as an asset. In particular data created through user contribution, but not exclusively.

(31:48) I think one of my principles was data is the new Intel inside, and that has really turned out over in the last 10 years to be very true. But this doesn’t mean that it’s at the heart of every business.

(31:59) Look for example at Apple, clearly a great business, but not a data driven business in the way that Google is for example. Google’s entire business was around a creative new way of using data to make better results. You know Apple, design genius and in some ways saying forget the data. You know I’m going to create something that people are going to want.

(32:30) But that being said the context of my thoughts about data were really in to give you a really long historical context that there were really formed by looking at historical analogies.

(32:45) I came into the industry a little before the IBM PC was introduced, and what really struck me was that there had been this dominant player – IBM with all the hardware and they thought the software didn’t matter. so they signed this deal with Microsoft. Microsoft realised that there was effectively a paradigms shift, in which software was going to become more important than hardware. Hardware that was going to become commoditized, and it did in fact become commoditized. There were a lot of people who spent time in still thinking that making a computer company was making hardware in competing with IBM. And you know eventually people did beat IBM there, but Microsoft just went on and created a whole new game.

(33:34) And they then dominated the industry for decades with this paradigm that software mattered. And what I saw was that with the open protocols of the Internet, and with open source software, software was being commoditized in the same way where hardware had been commoditized just before. And then I asked myself a question, well what will become valuable now?

(33:54) I came to the conclusion that it was data that was going to become valuable and that was really a kind of an ealy reflection on you know the kind of competitive advantage that you saw in a company like Google.

(34:09)So moving onto the Internet of things question, you know in some ways I don’t know if it comes after data, because data is still super important like software is super important and hardware is super important. But as computing starts to penetrate the real world, you know what super important is the vision to understand how to re-engineer that real world processes.

(34:49) There was a Tweet ones from Aaron Levy of Boxx who said, Uber is $3.5 billion is now worth 40 or $50 billion and in designing the way the world ought to be than simply the way it is and the initial, well we are going to computerize taxicabs meant that we will put a little terminal in the back , where you could swipe your credit card or we can show you ads. And like no actually, if we can call a car at any time anywhere, you know and have it show up because now we know where you are and where the driver is.

(35:23) You know, and if you think about that, actually at first people didn’t get it and I would say this is the para-dramatic Internet of things company they go where is the Internet thing device? Well it’s a smart phone, full of sensors and the fact that both the driver and the passenger has this sensor package if they are augmenting themselves is the paradigms. If one of those decides that it was a self-driving car, and we are thinking Internet of things. Or if it was a little car calling device, they would say it’s the Internet of things. But no, it just happens to be a general-purpose device.

(35:56) But that pattern of recreating real world processes, based on the capabilities you have now are so different. You know, oh we don’t actually do it this way we used to, and you know, when you look at other things like Monsanto buying, (fiber core?) plus precision planting and now we are doing this data everything from the satellite and weather data and we are actually saying, oh yeah, you know in this part of the field we are going to put this much fertilizer on all be going to put the seed this deep and in this part that you’re going to differently. It’s the same kind of thing, like we have capabilities now that we didn’t have before, and in some ways that kind of puts design at the centre in an odd way and not the design that’s about, you know making things pretty.

(36:46) But the kind of design that’s about – what will really trying to do here? You know, and everyone slaps there forehead and go oh wait! Wait that part we didn’t have to do. We can do it different.

Michael:

(37:00) You know, you’ve hit on you know I think two of the most interesting aspects of digital transformation, which is number one, how does that affect real world processes – how do we do things different, as opposed to digital transformation which means, well we’re going to sell something on the Internet and we can track the marketing numbers through analytics. So that’s number one, the real world changes, and then number two, is the fact that user experience becomes a central component in all of this.

Tim:

(37:37)Yeah and I think user experience is you know in some ways and obviously you can think of that narrow way as in UX testing and so on. But in the broad way – actually let me back up a little bit. there is an e-book by Michael Schrage out of MIT called, who do you want your customers to become, and in makes the case that great entrepreneurs actually create their customers. They make the world a place where a different kind of person exists who wants their product.

(38:15) You know, so if you think about it, Henry Ford – a great example, you know he invented the weekend. He invented I guess the Sabbath but he invented you know, there was so many things that he basically invented the idea that people would take these excursions in their cars. You know the kind of leisure to travel industry, which formerly belonged to only rich people. And suddenly it was something that everybody could do in their car, and he kind of invented a different kind of world.

(38:49) Then you look at what Google did and invented a world where we think that we should have access to all of the world information at our fingertips. You know, and the smart phone taking that even further, so we’ve all been changed in a profound way by these technologies.

(39:06) I think we see that right now with companies like Uber with the expectations that I can have on demand transportation. You know, it’s a profound shift and it’s going to ripple all the way through our society. And I think the Internet of things – so when I talk about design, I mean that kind of design. You know, thinking about the fact that the world could be different and then making it so.

Michael:

(39:29) Yeah on the design on the broadest sense, beginning from the point of view of what are we trying to actually accomplish here? What is the benefit we are going to bring forth?

Tim:

(39:42) But and that’s you know we just had at O’Reilly, we are covering a lot of this in our solid conference, which is our Internet of things conference coming up in June. Creating online conferences and designed for the Internet of things, and it’s really how do we think about all these issues? We have these immense new capabilities.

(40:02) Another good example would be the way that education is changing. You know, Khan Academy is a redesign of education. It’s not just supplemental material, you all here about the flip classroom but the whole notion of, hey wait, let’s instead of delivering a lecture in class, and then sending kids whole with homework, we’ll deliver the lecture at home and have them come in, where someone can actually work with them on their homework. You know, so much better and if you’ve got kids, you’ll realise of what a terrible curse homework is, and it’s not really well designed you know where to get your kids to actually watch the lecture at home – that’s easy.

(40:50) And so that’s like a redesign, it’s process redesign.

Vala:

(40:54) I’m incredibly impressed, I have a 12 year old daughter and she comes home all of her work – and it’s a public school is in the Google classroom, in the cloud and when her instructors grade her essays, we can actually click on these word bubbles and the instructor is talking to us about you know why they have took points off here, and this whole adapted learning model in the collaboration that includes the parents is incredible. You’re not going to be surprised in terms of doing the exam in whether you feel that you learned and you fully understand the topic. It’s just magical.

Tim:

(41:40) I think it goes even further you know we all probably saw the Matrix, you know where Trinity knows how to fly the helicopter and downloads the instructions. You know, you look at where we are going with augmented reality, that’s a big piece of that, it’s like you’re not downloading it directly into your brain yet, but you are sitting there and you know a company like Zachary out of LA, like here is a mechanic working on a jet fighter and they have got the overly showing him things what they’re supposed to look like. That really brings me to this whole flaming of this event that I’m working at and if we can use this technology to disempower people or we can use it to empower them.

(42:30) I have been telling the story about you know, here are two different ways to use data with employees. One is to create micro-shiftwork and oh, we used to think we needed you for eight hours. Now we are realizing that we need you for this three hours and this two hours, and by the way you are now part-time so now we don’t have to pay you benefits and yeah, we can save money. And of course, the employee is screwed.

(42:53) And the other is what Uber and Lyft is doing, like they are actually exposing the data to their workers, and you talk to these Uber and Lyft drivers, and what they say is they love that they are in charge. They get to decide of when I’m going to work, how long I’m going to work. And so he is this old industrial model taking to its acme with this sort of micro-data driven shiftwork.

(43:20) And with all kinds of tracking of how productive you are. And the other is we are going to make a market and we are actually going to have the network rate the workers. You know, there is all kinds of new business principles at play there. And all of that leads back to the design thing and you are multiply judged by, did you create a better experience with a customer rating system.

(43:47) It’s pretty awesome and fundamental transformation in the nature of work, which doesn’t mean that there are no problems with it you know, because as a society we have tried all kinds of safety net kind of things to traditional employment. So if someone says, oh this is a lousy job because it doesn’t have this factor or the other safety net thing. And you can go well, who created those things where we are only tied to do no traditional jobs. You know that’s a choice we made in this society and we can say, well this is actually a better way to organize work, let’s actually add on some of those other things.

Michael:

(44:0 20) Well, this has been a phenomenal conversation and unfortunately we’re out of time.

Vala:

(44:29) That was the fastest 45 minutes of my week, and we could have gone for another two hours. Tim, unbelievable insight, thank you so much.

Tim:

(44:39) Well I am glad to do it and I enjoyed talking with you guys.

Michael:

(44:44) And I hope you’ll come back another time, may be when you are doing your future of work conference, you can come on CXO-talk sometime around that period, and we can talk about the future of work.

Vala:

(44:56) And if you’re ever in Boston and courtside seats, you know where.

Michael:

(45:03) You have been watching episode number 111 of CXO-Talk I’m Michael Krigsman and my fabulous co-host, Vala Afshar. We have been joined by Tim O’Reilly, who is the founder of O’Reilly Media. Next week we have Mark Schwarz, who is the CIO of the US citizen and immigration service. So everybody have a great week. Tim, thank you for taking the time today and we’ll see you next time everybody, bye, bye.